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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 6/16/22 THC Therapeutics, Inc. 10-Q 4/30/22 61:3.8M Discount Edgar/FA |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 653K
2: EX-31.1 Certification -- §302 - SOA'02 HTML 20K
3: EX-31.2 Certification -- §302 - SOA'02 HTML 20K
4: EX-32.1 Certification -- §906 - SOA'02 HTML 16K
5: EX-32.2 Certification -- §906 - SOA'02 HTML 16K
11: R1 Cover HTML 64K
12: R2 Consolidated Balance Sheets HTML 118K
13: R3 Consolidated Balance Sheets (Parenthetical) HTML 41K
14: R4 Consolidated Statement of Operations HTML 85K
15: R5 Consolidated Statements of Stockholders Equity HTML 83K
16: R6 Consolidated Statement of Cash Flows HTML 85K
17: R7 Description of Business and History HTML 21K
18: R8 Basis of Presentation and Going Concern HTML 22K
19: R9 Summary of Significant Policies HTML 51K
20: R10 Physical Silver Assets HTML 19K
21: R11 Fixed Assets HTML 26K
22: R12 Intangible Assets HTML 25K
23: R13 Related Party Transactions HTML 38K
24: R14 Notes Payable HTML 22K
25: R15 Convertible Notes Payable HTML 63K
26: R16 Commitments and Contingencies HTML 24K
27: R17 Stock Warrants HTML 25K
28: R18 Shareholders Deficit HTML 36K
29: R19 Subsequent Events HTML 19K
30: R20 Summary of Significant Policies (Policies) HTML 74K
31: R21 Summary of Significant Policies (Tables) HTML 43K
32: R22 Fixed Assets (Tables) HTML 24K
33: R23 Intangible Assets (Tables) HTML 25K
34: R24 Related Party Transactions (Tables) HTML 36K
35: R25 Notes Payable (Tables) HTML 21K
36: R26 Convertible Notes Payable (Tables) HTML 63K
37: R27 Stock Warrants (Tables) HTML 26K
38: R28 Basis of Presentation and Going Concern (Details HTML 39K
Narrative)
39: R29 Summary of Significant Policies (Details ) HTML 25K
40: R30 Summary of Significant Policies (Details 1) HTML 22K
41: R31 Summary of Significant Policies (Details HTML 31K
Narrative)
42: R32 Physical Silver Assets (Details Narrative) HTML 17K
43: R33 Fixed Assets (Details) HTML 28K
44: R34 Fixed Assets (Details Narrative) HTML 18K
45: R35 Intangible Assets (Details) HTML 26K
46: R36 Intangible Assets (Details Narrative) HTML 18K
47: R37 Related Party Transactions (Details) HTML 27K
48: R38 Related Party Transactions (Details 1) HTML 26K
49: R39 Related Party Transactions (Details Narrative) HTML 43K
50: R40 Notes Payable (Details) HTML 21K
51: R41 Notes Payable (Details Narrative) HTML 21K
52: R42 Convertible Notes Payable (Details) HTML 38K
53: R43 Convertible Notes Payable (Details 1) HTML 26K
54: R44 Commitments and Contingencies (Details Narrative) HTML 20K
55: R45 Stock Warrants (Details) HTML 36K
56: R46 Shareholders Deficit (Details Narrative) HTML 138K
59: XML IDEA XML File -- Filing Summary XML 104K
57: XML XBRL Instance -- thct_10q_htm XML 983K
58: EXCEL IDEA Workbook of Financial Reports XLSX 63K
8: EX-101.CAL XBRL Calculations -- thct-20220430_cal XML 114K
10: EX-101.DEF XBRL Definitions -- thct-20220430_def XML 302K
7: EX-101.LAB XBRL Labels -- thct-20220430_lab XML 585K
9: EX-101.PRE XBRL Presentations -- thct-20220430_pre XML 473K
6: EX-101.SCH XBRL Schema -- thct-20220430 XSD 142K
60: JSON XBRL Instance as JSON Data -- MetaLinks 228± 297K
61: ZIP XBRL Zipped Folder -- 0001477932-22-004445-xbrl Zip 111K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM i 10-Q
i ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended i April 30, 2022
i ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to ____________
Commission File Number: i 000-55994
i THC THERAPEUTICS, INC. |
(Exact name of registrant as specified in its charter) |
i Nevada |
| i 26-0164981 |
(State or other jurisdiction of incorporation) |
| (IRS Employer Identification Number) |
i 11700 W Charleston Blvd. #73
(Address of principal executive offices)
( i 833)- i 420-8428
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None.
Title of each class | Trading Symbol | Name of each exchange on which registered |
Not applicable |
|
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ i Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ i Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
i Non-accelerated Filer | ☒ | Smaller reporting company | i ☒ |
| Emerging growth company | i ☐ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). i ☐ Yes ☒ No
As of June 13, 2022, the Company had i 33,891,671 shares of common stock outstanding.
INDEX
| Page | |
3 | ||
|
| |
3 | ||
| Consolidated Balance Sheets at April 30, 2022 (unaudited), and July 31, 2021 | 3 |
| 4 | |
| 5 | |
| 6 | |
| 7 | |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 | |
29 | ||
29 | ||
|
|
|
30 | ||
|
|
|
30 | ||
30 | ||
31 | ||
31 | ||
31 | ||
31 | ||
32 | ||
|
|
|
34 | ||
| 2 |
| Table of Contents |
THC THERAPEUTICS INC.
ASSETS |
|
|
|
| ||||
Current assets |
|
|
|
|
|
| ||
Cash |
| $ | i 3,817 |
|
| $ | i 296,130 |
|
Prepaid expenses |
|
| i 43,484 |
|
|
| i 4,586 |
|
Inventory |
|
| i 830 |
|
|
| i 830 |
|
Total current assets |
|
| i 48,131 |
|
|
| i 301,546 |
|
|
|
|
|
|
|
|
|
|
Physical silver assets |
|
| i 152,785 |
|
|
| i 152,785 |
|
Fixed assets, net |
|
| i 530 |
|
|
| i 9,480 |
|
Intangible assets, net |
|
| i 13,754 |
|
|
| i 16,257 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
| i 215,200 |
|
|
| i 480,068 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
| $ | i 1,451,442 |
|
| $ | i 970,445 |
|
Accrued expenses - related party |
|
| i 50,050 |
|
|
| i 28,077 |
|
Advances from related parties |
|
| i 124,864 |
|
|
| i 96,313 |
|
Notes payable, net |
|
| i 25,000 |
|
|
| i - |
|
Convertible notes payable |
|
| i 576,028 |
|
|
| i 561,346 |
|
Convertible notes payable- related party |
|
| i 200,000 |
|
|
| i 200,000 |
|
Derivative liability |
|
| i 1,546,769 |
|
|
| i 1,001,213 |
|
Total current liabilities |
|
| i 3,974,153 |
|
|
| i 2,857,394 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
| i 3,974,153 |
|
|
| i 2,857,394 |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (See note 9) |
|
| i 100,000 |
|
|
| i 100,000 |
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit |
|
|
|
|
|
|
|
|
Preferred stock; $ i 0.001 par value; i 10,000,000 shares authorized; |
|
|
|
|
|
|
|
|
i 213,300 and i 218,000 series A and B and C shares issued and outstanding |
|
|
|
|
|
|
|
|
as of April 30, 2022 and July 31, 2021, respectively |
|
|
|
|
|
|
|
|
Preferred A stock; $ i 0.001 par value; i 3,000,000 shares authorized; |
|
|
|
|
|
|
|
|
i 213,000 and i 218,000 shares issued and outstanding |
|
|
|
|
|
|
|
|
as of April 30, 2022 and July 31, 2021, respectively |
|
| i 213 |
|
|
| i 218 |
|
Preferred B stock; $ i 0.001 par value; i 16,500 shares authorized; |
|
|
|
|
|
|
|
|
i 0 and i 0 shares issued and outstanding |
|
|
|
|
|
|
|
|
as of April 30, 2022 and July 31, 2021, respectively |
|
| i - |
|
|
| i - |
|
Preferred C stock; $ i 0.001 par value; i 10,000 shares authorized; |
|
|
|
|
|
|
|
|
i 300 and i 300 shares issued and outstanding |
|
|
|
|
|
|
|
|
as of April 30, 2022 and July 31, 2021, respectively |
|
| i - |
|
|
| i - |
|
Common stock; $ i 0.001 par value; i 500,000,000 shares authorized; |
|
|
|
|
|
|
|
|
i 32,491,671 and i 29,287,337 shares issued and i 33,891,671 and i 29,287,337 shares |
|
|
|
|
|
|
|
|
outstanding as of April 30, 2022 and July 31, 2021, respectively |
|
| i 32,492 |
|
|
| i 29,287 |
|
|
|
|
|
|
|
|
|
|
Stock payable |
|
| i 622,038 |
|
|
| i 658,892 |
|
Stock receivable |
|
| ( i 6,902,000 | ) |
|
| ( i 6,902,000 | ) |
Additional paid-in capital |
|
| i 40,777,459 |
|
|
| i 40,254,257 |
|
Accumulated deficit |
|
| ( i 38,389,155 | ) |
|
| ( i 36,517,980 | ) |
Total stockholders' deficit |
|
| ( i 3,858,953 | ) |
|
| ( i 2,477,326 | ) |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit |
| $ | i 215,200 |
|
| $ | i 480,068 |
|
The accompanying notes are an integral part of these financial statements.
| 3 |
| Table of Contents |
THC THERAPEUTICS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
|
| For the Three Months Ended |
|
| For the Nine Months Ended |
| ||||||||||
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenues |
| $ | i - |
|
| $ | i - |
|
| $ | i - |
|
| $ | i - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees |
|
| i 43,148 |
|
|
| i 23,385 |
|
|
| i 161,459 |
|
|
| i 132,906 |
|
Consulting fees |
|
| i - |
|
|
| i 17,978 |
|
|
| i 487,715 |
|
|
| i 161,530 |
|
Salaries and wages |
|
| i 46,937 |
|
|
| i 46,937 |
|
|
| i 415,380 |
|
|
| i 149,038 |
|
General and administrative |
|
| i 33,444 |
|
|
| i 81,208 |
|
|
| i 148,605 |
|
|
| i 167,990 |
|
Total operating expenses |
|
| i 123,529 |
|
|
| i 169,508 |
|
|
| i 1,213,159 |
|
|
| i 611,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
| ( i 123,529 | ) |
|
| ( i 169,508 | ) |
|
| ( i 1,213,159 | ) |
|
| ( i 611,464 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on derivative liability |
|
| ( i 467,005 | ) |
|
| ( i 85,873 | ) |
|
| ( i 545,556 | ) |
|
| i 110,013 |
|
Interest expense |
|
| ( i 41,744 | ) |
|
| ( i 95,399 | ) |
|
| ( i 112,460 | ) |
|
| ( i 299,204 | ) |
Total other income (expense) |
|
| ( i 508,749 | ) |
|
| ( i 181,272 | ) |
|
| ( i 658,016 | ) |
|
| ( i 189,191 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | ( i 632,278 | ) |
| $ | ( i 350,780 | ) |
| $ | ( i 1,871,175 | ) |
| $ | ( i 800,655 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per common share |
| $ | ( i 0.02 | ) |
| $ | ( i 0.01 | ) |
| $ | ( i 0.06 | ) |
| $ | ( i 0.03 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares outstanding |
|
| i 32,491,671 |
|
|
| i 24,177,860 |
|
|
| i 33,497,983 |
|
|
| i 23,200,766 |
|
The accompanying notes are an integral part of these financial statements.
| 4 |
| Table of Contents |
THC THERAPEUTICS INC.
CONSOLIDATED STATEMENT OF SOTOCKHOLDERS’ DEFICIT
For the Nine Months Ending April 30, 2022
|
| Preferred A Stock |
|
| Preferred B Stock |
|
| Preferred C Stock |
|
| Common Stock |
|
| Additional Paid-in |
|
| Stock |
|
| Stock |
|
| Accumulated |
|
| Total Stockholders' |
| |||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Payable |
|
| Receivable |
|
| Deficit |
|
| Deficit |
| |||||||||||||
Balance, July 31, 2021 |
|
| i 218,000 |
|
|
| i 218 |
|
|
| - |
|
|
| i - |
|
|
| i 300 |
|
|
| i - |
|
|
| i 29,287,337 |
|
|
| i 29,287 |
|
|
| i 40,254,257 |
|
|
| i 658,892 |
|
|
| ( i 6,902,000 | ) |
|
| ( i 36,517,980 | ) |
|
| ( i 2,477,326 | ) |
Conversion of preferred shares into common stock shares |
|
| ( i 5,000 | ) |
|
| ( i 5 | ) |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i 500,000 |
|
|
| i 500 |
|
|
| ( i 495 | ) |
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
Shares issued for cash |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i 3,533,334 |
|
|
| i 3,533 |
|
|
| i 213,967 |
|
|
| ( i 217,500 | ) |
|
| i - |
|
|
| i - |
|
|
| i - |
|
Shares issued for services |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i 116,500 |
|
|
| i 117 |
|
|
| i 20,581 |
|
|
| i 14,731 |
|
|
| i - |
|
|
| i - |
|
|
| i 35,429 |
|
Net loss |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 486,437 | ) |
|
| ( i 486,437 | ) |
Balance, October 31, 2021 |
|
| i 213,000 |
|
|
| i 213 |
|
|
| - |
|
|
| i - |
|
|
| i 300 |
|
|
| i - |
|
|
| i 33,437,171 |
|
|
| i 33,437 |
|
|
| i 40,488,310 |
|
|
| i 456,123 |
|
|
| ( i 6,902,000 | ) |
|
| ( i 37,004,417 | ) |
|
| ( i 2,928,334 | ) |
Shares issued for cash |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| ( i 25,000 | ) |
|
| i 160,000 |
|
|
| i - |
|
|
| i - |
|
|
| i 135,000 |
|
Shares and warrants issued for services |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i 469,500 |
|
|
| i 470 |
|
|
| i 410,234 |
|
|
| ( i 6,085 | ) |
|
| i - |
|
|
| i - |
|
|
| i 404,619 |
|
Shares cancelled |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| ( i 15,000 | ) |
|
| ( i 15 | ) |
|
| i 15 |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
Repurchase of common stock |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| ( i 1,400,000 | ) |
|
| ( i 1,400 | ) |
|
| ( i 96,100 | ) |
|
| i 5,000 |
|
|
| i - |
|
|
| i - |
|
|
| ( i 92,500 | ) |
Net loss |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 752,460 | ) |
|
| ( i 752,460 | ) |
Balance, January 31, 2022 |
|
| i 213,000 |
|
|
| i 213 |
|
|
| - |
|
|
| i - |
|
|
| i 300 |
|
|
| i - |
|
|
| i 32,491,671 |
|
|
| i 32,492 |
|
|
| i 40,777,459 |
|
|
| i 615,038 |
|
|
| ( i 6,902,000 | ) |
|
| ( i 37,756,877 | ) |
|
| ( i 3,233,675 | ) |
Cash received for stock |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i 12,000 |
|
|
| i - |
|
|
| i - |
|
|
| i 12,000 |
|
Repurchase of common stock |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 5,000 | ) |
|
| i - |
|
|
| i - |
|
|
| ( i 5,000 | ) |
Net loss |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 632,278 | ) |
|
| ( i 632,278 | ) |
Balance, April 30, 2022 |
|
| i 213,000 |
|
|
| i 213 |
|
|
| - |
|
|
| i - |
|
|
| i 300 |
|
|
| i - |
|
|
| i 32,491,671 |
|
|
| i 32,492 |
|
|
| i 40,777,459 |
|
|
| i 622,038 |
|
|
| ( i 6,902,000 | ) |
|
| ( i 38,389,155 | ) |
|
| ( i 3,858,953 | ) |
For the Nine Months Ending April 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Preferred A Stock |
|
| Preferred B Stock |
|
| Preferred C Stock |
|
| Common Stock |
|
| Additional Paid-in |
|
| Stock |
|
| Stock |
|
| Accumulated |
|
| Total Stockholders' |
| |||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Payable |
|
| Receivable |
|
| Deficit |
|
| Deficit |
| |||||||||||||
Balance, July 31, 2019 |
|
| i 218,000 |
|
|
| i 218 |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i 21,461,784 |
|
|
| i 21,462 |
|
|
| i 39,506,284 |
|
|
| i 221,700 |
|
|
| ( i 6,902,000 | ) |
|
| ( i 34,626,315 | ) |
|
| ( i 1,778,651 | ) |
Shares issued for conversion of convertible debt |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i 718,908 |
|
|
| i 719 |
|
|
| i 21,281 |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i 22,000 |
|
Net loss |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 90,050 | ) |
|
| ( i 90,050 | ) |
Balance, October 31, 2020 |
|
| i 218,000 |
|
|
| i 218 |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i 22,180,692 |
|
|
| i 22,181 |
|
|
| i 39,527,565 |
|
|
| i 221,700 |
|
|
| ( i 6,902,000 | ) |
|
| ( i 34,716,365 | ) |
|
| ( i 1,846,701 | ) |
Shares and warrants issued for services |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i 108,552 |
|
|
| i - |
|
|
| i - |
|
|
| i 108,552 |
|
Cash received for stock |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i 297,500 |
|
|
| i - |
|
|
| i - |
|
|
| i 297,500 |
|
Shares issued for conversion of convertible debt |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i 1,997,168 |
|
|
| i 1,997 |
|
|
| i 38,003 |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i 40,000 |
|
Derivative written off to additional paid in capital |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i 42,833 |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i 42,833 |
|
Net loss |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 359,825 | ) |
|
| ( i 359,825 | ) |
Balance, January 31, 2021 |
|
| i 218,000 |
|
|
| i 218 |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i 24,177,860 |
|
|
| i 24,178 |
|
|
| i 39,608,401 |
|
|
| i 627,752 |
|
|
| ( i 6,902,000 | ) |
|
| ( i 35,076,190 | ) |
|
| ( i 1,717,641 | ) |
Cash received for stock |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i 209,000 |
|
|
| i - |
|
|
| i - |
|
|
| i 209,000 |
|
Net loss |
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 350,780 | ) |
|
| ( i 350,780 | ) |
Balance, April 30, 2021 |
|
| i 218,000 |
|
|
| i 218 |
|
|
| - |
|
|
| i - |
|
|
| - |
|
|
| i - |
|
|
| i 24,177,860 |
|
|
| i 24,178 |
|
|
| i 39,608,401 |
|
|
| i 836,752 |
|
|
| ( i 6,902,000 | ) |
|
| ( i 35,426,970 | ) |
|
| ( i 1,859,421 | ) |
The accompanying notes are an integral part of these financial statements.
| 5 |
| Table of Contents |
THC THERAPEUTICS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
|
| For the Nine Months Ended |
| |||||
|
|
|
|
| ||||
Cash Flows from Operating Activities |
|
|
|
|
|
| ||
Net loss |
| $ | ( i 1,871,175 | ) |
| $ | ( i 800,655 | ) |
Adjustments to reconcile net loss to net cash used by operating activities: |
|
|
|
|
|
|
|
|
Loss (gain) on change in derivative liabilities |
|
| i 545,556 |
|
|
| ( i 110,013 | ) |
Amortization of debt discount |
|
| i 14,682 |
|
|
| i 243,404 |
|
Stock based compensation |
|
| i 440,048 |
|
|
| i 108,552 |
|
Depreciation and amortization |
|
| i 11,453 |
|
|
| i 12,244 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
Increase (decrease) in prepaid assets |
|
| ( i 38,898 | ) |
|
| ( i 18,300 | ) |
Increase (decrease) in accounts payable |
|
| i 480,997 |
|
|
| i 203,777 |
|
Increase (decrease) in accounts payable related party |
|
| i 21,973 |
|
|
| i 8,657 |
|
Net cash used in operating activities |
|
| ( i 395,364 | ) |
|
| ( i 352,334 | ) |
|
|
|
|
|
|
|
|
|
Cash Flows from investing |
|
|
|
|
|
|
|
|
Purchase of silver |
|
| i - |
|
|
| ( i 152,785 | ) |
Net cash used in investing activities |
|
| i - |
|
|
| ( i 152,785 | ) |
|
|
|
|
|
|
|
|
|
Cash Flows provided by Financing Activities |
|
|
|
|
|
|
|
|
Proceeds from related party advances |
|
| i 63,168 |
|
|
| i 82,587 |
|
Payments on related party advances |
|
| ( i 34,617 | ) |
|
| ( i 61,312 | ) |
Proceeds from sale of common stock |
|
| i 147,000 |
|
|
| i 506,500 |
|
Repurchase of common stock |
|
| ( i 97,500 | ) |
|
| i - |
|
Proceeds from convertible notes payable |
|
| i 25,000 |
|
|
| i - |
|
Repayments of convertible notes payable |
|
| i - |
|
|
| ( i 25,000 | ) |
Net cash provided by financing activities |
|
| i 103,051 |
|
|
| i 502,775 |
|
|
|
|
|
|
|
|
|
|
Net decrease in Cash |
|
| ( i 292,313 | ) |
|
| ( i 2,344 | ) |
|
|
|
|
|
|
|
|
|
Beginning cash balance |
|
| i 296,130 |
|
|
| i 43,239 |
|
|
|
|
|
|
|
|
|
|
Ending cash balance |
| $ | i 3,817 |
|
| $ | i 40,895 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
|
|
Derivative liability written off to additional paid in capital |
| $ | i - |
|
| $ | i 42,833 |
|
Shares issued for the conversion of debt |
| $ | - |
|
| $ | i 62,000 |
|
The accompanying notes are an integral part of these financial statements.
| 6 |
| Table of Contents |
THC THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
i
1. DESCRIPTION OF BUSINESS AND HISTORY
Description of business – THC Therapeutics, Inc. (referred to as the “Company”) is focused developing its patented product, the dHydronator®, a sanitizing herb dryer. The main function of the dHydronator is to greatly accelerate the drying time of a herb while sanitizing it. The dHydronator can be used to dry a variety of herbs, but it has been specifically tested for use with cannabis, and it can reduce the drying time for cannabis from 10-14 days to less than 14 hours.
History – The Company was incorporated in the State of Nevada on May 1, 2007, as Fairytale Ventures, Inc., and later changed its name to Aviation Surveillance Systems, Inc. and Harmonic Energy, Inc. On January 23, 2017, the Company changed its name to THC Therapeutics, Inc.
On May 30, 2017, the Company formed Genesis Float Spa LLC, a wholly-owned subsidiary, to market its float spa assets purchased for wellness centers. The Company’s health spa plans are part of the Company’s strategic focus on revenue generation and creating shareholder value.
On January 17, 2018, the Company changed its name to Millennium Blockchain Inc.
On September 28, 2018, the Company changed its name back to THC Therapeutics, Inc.
THC Therapeutics, Inc., together with its subsidiaries, shall herein be collectively referred to as the “Company.”
i
2. BASIS OF PRESENTATION AND GOING CONCERN
Basis of Presentation and Principles of Consolidation – The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Audited Financial Statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent Annual Audited Financial Statements have been omitted.
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
Going Concern – The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.
Management evaluated all relevant conditions and events that are reasonably known or reasonably knowable, in the aggregate, as of the date the consolidated financial statements are issued and determined that substantial doubt exists about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on the Company’s ability to generate revenues and raise capital. The Company has not generated sufficient revenues to provide sufficient cash flows to enable the Company to finance its operations internally. As of April 30, 2022, the Company had $ i 3,817 cash on hand. At April 30, 2022 the Company has an accumulated deficit of $ i 38,389,155. For the nine months ended April 30, 2022 the Company had a net loss of $ i 1,871,175, and net cash used in operations of $ i 395,364. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date of filing.
Over the next twelve months management plans to use borrowings and security sales to mitigate the effects of cash flow deficits; however, no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue existence.
/
| 7 |
| Table of Contents |
i
3. SUMMARY OF SIGNIFICANT POLICIES
Use of Estimates
i
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to review the Company’s goodwill, impairments and estimations of long-lived assets, revenue recognition on percentage of completion type contracts, allowances for uncollectible accounts, inventory valuation, and the valuations of non-cash capital stock issuances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Cash and Cash Equivalents
i
For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term instruments with original maturities of six months or less to be cash equivalents. There were $ i 3,817 and $ i 296,130 in cash and no cash equivalents as of April 30, 2022 and July 31, 2021, respectively.
/
Concentration Risk
i
At times throughout the year, the Company may maintain cash balances in certain bank accounts in excess of FDIC limits. As of April 30, 2022, the cash balance in excess of the FDIC limits was $ i 0. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in these accounts.
/
Revenue Recognition
i
We recognize revenue in accordance with generally accepted accounting principles as outlined in the Financial Accounting Standard Board's (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue From Contracts with Customers, which requires that five steps be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.
The company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by governmental authorities that are collected by the company from its customers (sales and use taxes, value added taxes, some excise taxes).
Revenues from the sale of products are recognized when title to the products are transferred to the customer and only when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive reasonably assured payments for products sold and delivered.
Fair Value of Financial Instruments
i
The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items.
As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
/
| 8 |
| Table of Contents |
The six levels of the fair value hierarchy are described below:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of April 30, 2022:
i
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Physical Silver Assets |
| $ | i 152,785 |
|
| $ | - |
|
| $ | - |
|
| $ | i 152,785 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Financial Instruments |
| $ | - |
|
| $ | - |
|
| $ | i 1,546,769 |
|
| $ | i 1,546,769 |
|
As of April 30, 2022, the Company’s stock price was $ i 0.002, risk-free discount rate of i 0.37% and volatility of i 763.43%.
The following tables provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs for the nine months ended April 30, 2022:
i
|
| Amount |
| |
Balance July 31, 2021 |
| $ | i 1,001,213 |
|
Derivative reclassed to additional paid in capital |
|
| - |
|
Change in fair market value of derivative liabilities |
|
| i 545,556 |
|
Balance April 30, 2022 |
| $ | i 1,546,769 |
|
Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of July 31, 2021:
i
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Derivative Financial Instruments |
| $ | - |
|
| $ | - |
|
| $ | i 1,001,213 |
|
| $ | i 1,001,213 |
|
As of July 31, 2021, the Company’s stock price was $ i 0.11, risk-free discount rate of i 0.05% and volatility of i 236.13%.
Goodwill and Intangible Assets
i
The Company follows Financial Accounting Standard Board’s (FASB) Codification Topic 350-10 (“ASC 350-10”), “Intangibles – Goodwill and Other.” According to this statement, goodwill and intangible assets with indefinite lives are no longer subject to amortization, but rather an annual assessment of impairment by applying a fair-value based test. Fair value for goodwill is based on discounted cash flows, market multiples and/or appraised values as appropriate. Under ASC 350-10, the carrying value of assets are calculated at the lowest level for which there are identifiable cash flows.
| 9 |
| Table of Contents |
Long-Lived Assets
i
In accordance with the Financial Accounting Standards Board ("FASB") Accounts Standard Codification (ASC) ASC 360-10, "Property, Plant and Equipment," the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. During the nine months ending April 30, 2022 and 2021 the Company recorded an impairment expense of $0 and $0, respectively.
Income Taxes
i
The Company accounts for its income taxes in accordance with FASB Codification Topic ASC 740-10, “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Stock-Based Compensation
i
The Company follows the guidelines in FASB Codification Topic ASC 718-10 “Compensation-Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values.
Earnings (Loss) Per Share
i
The Company reports earnings (loss) per share in accordance with FASB Codification Topic ASC 260-10 “Earnings Per Share.” Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed exercise of options and warrants to purchase common shares (common stock equivalents) would have an anti-dilutive effect.
Advertising Costs
i
The Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred advertising expenses of $ i 6,653 and $ i 27,833 during the nine months ended April 30, 2022 and 2021, respectively.
/i
4. PHYSICAL SILVER ASSETS
During the year ending July 31, 2021, the Company purchased silver bars and coins for $ i 152,785. We determine the fair value of our silver on a nonrecurring basis in accordance with ASC 820, Fair Value Measurement, based on quoted prices on the active exchange(s) that we have determined is its principal market for silver (Level 1 inputs). We perform an analysis each quarter to identify whether events or changes in circumstances, principally decreases in the quoted prices on active exchanges, indicate that it is more likely than not that our silver assets are impaired. In determining if an impairment has occurred, we consider the lowest market price of silver quoted on the active exchange since acquiring the silver. If the then current carrying value of a silver exceeds the fair value so determined, an impairment loss has occurred with respect to those silver assets in the amount equal to the difference between their carrying values and the price determined.
/
| 10 |
| Table of Contents |
i
5. FIXED ASSETS
Fixed assets consist of the following as of April 30, 2022 and July 31, 2021:
i
|
| 2022 |
|
| 2021 |
| ||
dHydronator prototype |
| $ | i 27,100 |
|
| $ | i 27,100 |
|
Float Spa and associated equipment |
|
| i 60,000 |
|
|
| i 60,000 |
|
Office furniture and equipment |
|
| i 532 |
|
|
| i 532 |
|
Less: accumulated depreciation |
|
| ( i 87,102 | ) |
|
| ( i 78,152 | ) |
Fixed assets, net |
| $ | i 530 |
|
| $ | i 9,480 |
|
Depreciation expense for the nine months ended April 30, 2022 and 2021, was $ i 8,950 and $ i 8,950, respectively.
/i
6. INTANGIBLE ASSETS
Intangible assets consist of the following as of April 30, 2022 and July 31, 2021:
i
|
| 2022 |
|
| 2021 |
| ||
Patents and patents pending |
| $ | i 19,699 |
|
| $ | i 19,699 |
|
Trademarks |
|
| i 1,275 |
|
|
| i 1,275 |
|
Website and domain names |
|
| i 15,098 |
|
|
| i 15,098 |
|
Less: accumulated depreciation |
|
| ( i 22,318 | ) |
|
| ( i 19,815 | ) |
Intangible assets, net |
| $ | i 13,754 |
|
| $ | i 16,257 |
|
Amortization expense for the nine months ended April 30, 2022 and 2021, was $ i 2,503 and $ i 3,294 respectively.
/i
7. RELATED PARTY TRANSACTIONS
ADVANCES FROM RELATED PARTIES
Our Chief Executive Officer and Harvey Romanek, father of our Chief Executive Officer, previously agreed to advance funds to the Company from time to time to support the ongoing operations of the Company. Advances are due within ten days of demand and bear interest at i 5% annually.
Advances from related parties consist of the following as of April 30, 2022:
i
|
| Principal as of 2021 |
|
| Six Months ending |
|
| Principal as of |
|
| Accrued interest balance As of |
| ||||||||
|
|
|
| Funds advanced |
|
| Funds repaid |
|
| 2022 |
|
| 2022 |
| ||||||
B. Romanek, President and CEO |
| $ | i 25,920 |
|
| $ | i 73,976 |
|
| $ | ( i 45,425 | ) |
| $ | i 54,471 |
|
| $ | i 37,227 |
|
Shareholder Relative of our President and CEO |
|
| i 70,393 |
|
|
| - |
|
|
| - |
|
|
| i 70,393 |
|
|
| i 12,823 |
|
TOTAL |
| $ | i 96,313 |
|
| $ | i 73,976 |
|
| $ | ( i 45,425 | ) |
| $ | i 124,864 |
|
| $ | i 50,050 |
|
| 11 |
| Table of Contents |
CONVERTIBLE NOTES PAYABLE RELATED PARTY
On May 1, 2019, we entered into a convertible promissory note pursuant to which we borrowed $ i 200,000 from Harvey Romanek, the father of the Company’s Chief Executive Officer, Brandon Romanek. Interest under the convertible promissory note is i 10% per annum, and the principal and all accrued but unpaid interest is due on i May 1, 2021. The note is convertible six months after the issuance date at the noteholder’s option into shares of our common stock at a Variable Conversion Price of i 65% multiplied by the lowest Trading Price for the Common Stock during the ten ( i 10) Trading Day period ending on the last complete Trading Day prior to the Conversion Date.
The Company recorded a debt discount in the amount of $ i 200,000 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note.
Further, the Company recognized a derivative liability of $ i 387,232 and an initial loss of $ i 187,232 based on the Black-Scholes pricing model.
As of April 30, 2022, convertible notes due to related parties was $ i 200,000.
The Company accounts for the fair value of the conversion features of its convertible debt in accordance with ASC Topic No. 815-15 “Derivatives and Hedging; Embedded Derivatives” (“Topic No. 815-15”). Topic No. 815-15 requires the Company to bifurcate and separately account for the conversion features as an embedded derivative contained in the Company’s convertible debt. The Company is required to carry the embedded derivative on its balance sheet at fair value and account for any unrealized change in fair value as a component of results of operations. The Company values the embedded derivatives using the Black-Scholes pricing model.
The Black-Scholes model, adopted by management as an appropriate financial model, utilized the following inputs to value the derivative liabilities at the date of issuance of the convertible note through April 30, 2022:
i
Risk free interest rate |
|
| i 0.37 | % |
Expected term (years) |
|
| i 0 |
|
Expected volatility |
|
| i 763.43 | % |
Expected dividends |
|
| i 0 | % |
i
8. NOTES PAYABLE
Notes payable consist of the following at:
i
|
| 2022 |
|
| 2021 |
| ||
Note payable, unsecured, 12% interest, due March 30, 2023 |
|
| i 25,000 |
|
|
| - |
|
Total Notes Payable |
| $ | i 25,000 |
|
| $ | - |
|
On March 30, 2022, the Company issued a $ i 25,000 i 12% promissory note. The note is due on i March 30, 2023.
/
| 12 |
| Table of Contents |
i
9. CONVERTIBLE NOTES PAYABLE
Convertible Notes Payable at consists of the following:
i
|
| April 30, |
|
|
| |||
|
| 2022 |
|
| 2021 |
| ||
On April 4, 2019, we entered into a master convertible promissory note pursuant to which we may borrow up to $250,000 in $50,000 tranches.
On April 19, 2019, we borrowed the first tranche of $50,000, net of debt issuance costs and investor legal fees of $7,000, resulting in the Company receiving $43,000.
On June 19, 2019, we borrowed the second tranche of $50,000, net of debt issuance costs and investor legal fees of $7,000, resulting in the Company receiving $43,000.
On January 27, 2020, we borrowed the third tranche of $35,000, net of debt issuance costs and investor legal fees of $7,000, resulting in the Company receiving $30,500.
On January 31, 2019, the lender converted $9,532 of principle and $500 of fees into 16,500 shares of common stock.
On December 12, 2020, the lender converted $9,700 of principle and $500 of fees into 34,000 shares of common stock.
On February 10, 2020, the lender converted $10,156 of principle and $500 of fees into 120,000 shares of common stock.
On March 24, 2020, the lender converted $7,628 of principle and $500 of fees into 160,000 shares of common stock.
On April 13, 2020, the lender converted $7,900 of principle and $500 of fees into 300,000 shares of common stock.
On April 28, 2020, the lender converted $5,084 of principle, $500 of fees, and $5,000 of interest into 588,000 shares of common stock.
On May 26, 2020, the lender converted $13,000 of principle, and $500 of fees into 750,000 shares of common stock.
Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on April 4, 2020. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a variable conversion price equal to the lesser of (i) the lowest Trading Price during the previous twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the date of this Note or (ii) Variable Conversion Price of 60% multiplied by the lowest Trading Price for the Common Stock during the twenty-five (25) Trading Day period ending on the last complete Trading Day prior to the Conversion Date.
The Company recorded debt discounts in the amount of $135,000 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of each tranche of the Note to be amortized utilizing the effective interest method of accretion over the term of each tranche of the Note. The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $0 during the nine months ended April 30, 2022.
Further, the Company recognized a derivative liability of $465,748 and an initial loss of $335,248 based on the Black-Scholes pricing model.
|
|
| i 72,000 |
|
|
| i 72,000 |
|
Unamortized debt discount |
|
| - |
|
| - |
| |
Total, net of unamortized discount |
|
| i 72,000 |
|
|
| i 72,000 |
|
| 13 |
| Table of Contents |
On June 20, 2019, we entered into a convertible promissory note pursuant to which we borrowed $291,108, net of an Original Issue Discount (“OID”) of $36,108 and investor legal expenses of $5,000 resulting in the Company receiving $250,000.
On January 31, 2019, the lender converted $30,000 of principle into 170,940 shares of common stock.
On March 27, 2020, the lender converted $30,000 of principle into 267,016 shares of common stock.
On April 23, 2020, the lender converted $21,000 of principle into 210,108 shares of common stock.
On April 23, 2020, the lender converted $30,000 of principle into 1,129,816 shares of common stock
On May 28, 2020, the lender converted $35,000 of principle into 1,318,118 shares of common stock
Interest under the convertible promissory note is 8% per annum, and the principal and all accrued but unpaid interest is due on June 20, 2020. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a conversion price equal to $8.80 (the “Lender Conversion Price”). Additionally, after 6 months from the date the Company receives note funding, the noteholder has the right to demand whole or partial redemption of amounts owed to the noteholder under the note. Payments of redemption amounts by the Company to the noteholder can be made in cash or by converting the redemption amount into shares common stock of the Company, with such conversions occurring at the lower of (i) the Lender Conversion Price, or (ii) a price equal to the 65% of the two lowest Closing Trade Prices during the ten (10) Trading Day period immediately preceding the measurement date.
The Company recorded a debt discount in the amount of $182,499 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $0 during the nine months ended April 30, 2022.
Further, the Company recognized a derivative liability of $141,391 and an initial loss of $0 based on the Black-Scholes pricing model.
|
|
| i 145,108 |
|
|
| i 145,108 |
|
Unamortized debt discount |
|
| - |
|
| - |
| |
Total, net of unamortized discount |
|
| i 145,108 |
|
|
| i 145,108 |
| 14 |
| Table of Contents |
On February 20, 2020, we entered into a convertible promissory note pursuant to which we borrowed $135,680, net of an Original Issue Discount (“OID”) of $7,680 and investor legal expenses of $2,500 resulting in the Company receiving $125,500.
On September 2, 2020, the lender converted $10,000 of principle into 242,718 shares of common stock
On September 30, 2020, the lender converted $12,000 of principle into 476,190 shares of common stock
On November 14, 2020, the lender converted $20,000 of principle into 938,967 shares of common stock.
On December 1, 2020, the lender converted $20,000 of principle into 1,058,201 shares of common stock.
The fair value of the derivative liability associated with the conversions for the nine months ended April 30, 2021 on the date of settlement of $16,244 was recorded to additional paid in capital.
Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on August 15, 2021. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a conversion price equal to 71% of the average of the 2 lowest trading prices of the common stock during the 10 completed trading days prior to conversion date.
The Company recorded a debt discount in the amount of $135,680 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $3,714 during the nine months ended April 30, 2022.
Further, the Company recognized a derivative liability of $192,236 and an initial loss of $64,236 based on the Black-Scholes pricing model.
|
|
|
i 147,360 |
|
|
| i 147,360 |
|
Unamortized debt discount | (- | ) | ( i 3,714 | ) | ||||
Total, net of unamortized discount |
|
| i 147,360 |
|
|
| i 143,646 |
|
| 15 |
| Table of Contents |
On March 26, 2020, we entered into a convertible promissory note pursuant to which we borrowed $3,000, net of legal expenses of $3,000 resulting in the Company receiving $0.
Interest under the convertible promissory note is 0% per annum, and the principal and all accrued but unpaid interest is due on March 26, 2021. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a conversion price equal to the average of the closing trading prices of the common stock during the 3 completed trading days prior to conversion date.
The Company recorded a debt discount in the amount of $3,000 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $0 during the nine months ended April 30, 2022.
Further, the Company recognized a derivative liability of $1,500 and an initial loss of $1,500 based on the Black-Scholes pricing model. |
|
| i 3,000 |
|
|
| i 3,000 |
|
Unamortized debt discount |
| (-) |
|
| (-) |
| ||
Total, net of unamortized discount |
|
| i 3,000 |
|
|
| i 3,000 |
|
On May 1, 2020, we entered into a convertible promissory note pursuant to which we borrowed $100,000, net of consulting expenses of $100,000 resulting in the Company receiving $0. During the nine months ended April 30, 2021, the Company made cash payments of $25,000.
Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on May 1, 2021. The note is convertible at any date after the effective date at the noteholder’s option into shares of our common stock at a conversion price equal to 65% of the average of the six lowest closing prices in the 10 trading days prior to the conversion.
The Company recorded a debt discount in the amount of $64,888 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $0 during the nine months ended April 30, 2022.
Further, the Company recognized a derivative liability of $64,888 based on the Black-Scholes pricing model. |
|
| i 75,000 |
|
|
| i 75,000 |
|
Unamortized debt discount |
| (-) |
|
| (-) |
| ||
Total, net of unamortized discount |
|
| i 75,000 |
|
|
| i 75,000 |
|
| 16 |
| Table of Contents |
On May 7, 2020, we entered into a convertible promissory note pursuant to which we borrowed $66,780, net of an Original Issue Discount (“OID”) of $3,780 and investor legal expenses of $3,000 resulting in the Company receiving $60,000.
Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on October 29, 2021. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a conversion price equal to 71% of the average of the 2 lowest trading prices of the common stock during the 10 completed trading days prior to conversion date.
The Company recorded a debt discount in the amount of $66,780 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $10,968 during the nine months ended April 30, 2022.
Further, the Company recognized a derivative liability of $138,172 and an initial loss of $134,237 based on the Black-Scholes pricing model. |
|
| i 133,560 |
|
|
| i 133,560 |
|
Unamortized debt discount |
| (-) |
|
|
| ( i 10,968 | ) | |
Total, net of unamortized discount |
|
| i 133,560 |
|
|
| i 122,592 |
|
Total notes payable, net of unamortized discount |
| $ | i 576,028 |
|
| $ | i 561,346 |
|
The Company accounts for the fair value of the conversion features of its convertible debt in accordance with ASC Topic No. 815-15 “Derivatives and Hedging; Embedded Derivatives” (“Topic No. 815-15”). Topic No. 815-15 requires the Company to bifurcate and separately account for the conversion features as an embedded derivative contained in the Company’s convertible debt. The Company is required to carry the embedded derivative on its balance sheet at fair value and account for any unrealized change in fair value as a component of results of operations. The Company values the embedded derivatives using the Black-Scholes pricing model.
The Black-Scholes model, adopted by management as an appropriate financial model, utilized the following inputs to value the derivative liabilities at the date of issuance of the convertible note through April 30, 2022:
i
Risk free interest rate |
|
| i 0.37 | % |
Expected term (years) |
|
| i 0 |
|
Expected volatility |
|
| i 763.43 | % |
Expected dividends |
|
| i 0 | % |
| 17 |
| Table of Contents |
i
10. COMMITMENTS AND CONTINGENCIES
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us, other than as set forth herein.
On or about December 18, 2020, Power Up Lending Group, Ltd. (“Power Up”) filed suit against the Company, the Company’s executive officers, and the Company’s transfer agent (Case Index No. 614700/2020, Supreme Court of the State of New York for Nassau County, Power Up Lending Group, Ltd. v. THC Therapeutics, Inc., Parker Mitchell, Transhare Corporation, and Brandon Romanek), alleging that the Company’s convertible promissory notes issued to Power Up are in default as a result of the Company’s alleged failure to honor the conversion terms of the notes along with related claims, and seeking monetary damages in excess of $ i 280,920 (representing i 200% of the outstanding note balances) and equitable relief to force the Company to honor Power Up’s conversion of note amounts into Company common stock. The Company and its officers answered the complaint and filed counterclaims against Power Up. The parties settled in July of 2021, and the case was subsequently dismissed by Power Up.
On or about January 5, 2021, another Company lender, Iliad Research and Trading, L.P. (“Iliad”), sent a demand letter to the Company regarding the Company’s alleged default under its promissory note issued to Iliad. The Company retained litigation counsel in Nevada and responded, and Iliad sued the Company in the fall of 2021 in Utah, where Iliad is domiciled (case no. 210000342 filed in the Third Judicial Court of Salt Lake City, Utah). In December of 2021, the Company was improperly served, Iliad subsequently received a default judgment, and the Company then filed a motion to set aside the judgment, which motion was granted by the court on or about May 9, 2022. The Company intends to vigorously defend the action and on or about May 31, 2022, removed the case to United States District Court for the District of Utah (case no. 2:22-cv-00367-DAO). The Company subsequently filed a motion to stay arbitration as demanded by Iliad, and filed an Answer and Counterclaim against Iliad.
In the spring of 2021, the Company’s former CEO, Parker Mitchell, filed suit against the Company for wrongful termination (case no. A-21-833007-Z filed in the District Court for Clark County, Nevada). The matter was subsequently settled on or about December 12, 2021, and the case was then dismissed.
In the fall of 2021, the Company’s former CFO, an individual representing himself as Jonathan Cross, but who, upon information and belief was the convicted felon, John Dankovich, made numerous demands of the Company in connection with his termination by the Company. The Company responded to Mr. Dankovich on or about November 11, 2021, and Mr. Dankovich has taken no further action against the Company to its knowledge.
In the fall of 2021, one of the Company’s former directors and current Company business consultant, Joshua Halford, made a demand for payment of funds due to Mr. Halford under a consulting agreement, Mr. Halford and the Company have since resolved the matter, and Mr. Halford is still providing consulting and technical design services to the Company in connection with the Company’s dHyrdonator herb dryer product redesign.
/i
11. STOCK WARRANTS
The following is a summary of warrant activity during the nine months ended April 30, 2022.
i
|
| Number of Shares |
|
| Weighted Average Exercise Price |
| ||
Balance, July 31, 2021 |
|
| i 815,379 |
|
| $ | i 16.21 |
|
Warrants granted and assumed |
|
| i 3,000,000 |
|
|
| i 0.09 |
|
Warrants expired |
|
| - |
|
|
| - |
|
Warrants canceled |
|
| ( i 5,000 | ) |
|
| ( i 0.05 | ) |
Warrants exercised |
|
| - |
|
|
| - |
|
Balance outstanding and exercisable, April 30, 2022 |
|
| i 3,810,379 |
|
| $ | i 16.25 |
|
| 18 |
| Table of Contents |
i
12. SHAREHOLDERS’ DEFICIT
Overview
The Company’s authorized capital stock consists of i 500,000,000 shares of $ i 0.001 par value common stock and i 10,000,000 shares of $ i 0.001 par value preferred stock.
As of April 30, 2022 and July 31, 2021, the Company had i 32,491,671 and i 29,287,337 shares of common stock issued and outstanding, respectively.
As of April 30, 2022 and July 31, 2021, the Company had i 213,000 and i 218,000 shares of Series A Preferred Stock issued and outstanding, respectively.
As of April 30, 2022 and July 31, 2021, the Company had i 0 and i 0 shares of Series B Preferred Stock issued and outstanding, respectively.
As of April 30, 2022 and July 31, 2021, the Company had i 300 and i 300 shares of Series C Preferred Stock issued and outstanding, respectively.
Series A Preferred Stock
On January 24, 2017, pursuant to Article III of our Articles of Incorporation, the Company designated a class of preferred stock, the “Series A Preferred Stock,” consisting of six million ( i 3,000,000) shares, par value $ i 0.001.
Under the Certificate of Designation, holders of i the Series A Preferred Stock are entitled at their option to convert their preferred shares into common stock at a conversion rate of one hundred (100) shares of common stock for every one (1) share of Series A Preferred Stock. The holders are further entitled to vote together with the holders of the Company’s common stock on all matters submitted to shareholders at a rate of one hundred (100) votes for each share held. The holders are entitled to equal rights with our common stockholders as it relates to liquidation preference.
Series B Preferred Stock
On May 12, 2017, pursuant to Article III of our Articles of Incorporation, the Company designated a class of preferred stock, the “Series B Preferred Stock,” consisting of up to one hundred twenty thousand ( i 120,000) shares, par value $ i 0.001. On June 5, 2017, the Company amended the designation to increase the number of shares of Series B Preferred Stock to one hundred sixty-five thousand ( i 165,000) shares, par value $ i 0.001.
Under the Certificate of Designation, as amended, holders of Series B Preferred Stock are entitled to a liquidation preference on the stated value of $ i 10.00 per share. The shares carry a mandatory conversion provision, and all shares of Series B Preferred Stock will be redeemed by the Company one year from issuance, at a variable conversion rate equal to the stated price of $ i 10.00 divided by the prior day’s closing price as quoted on OTC Markets. Holders of Series B Preferred Stock are not entitled to any voting or dividend rights.
As of April 30, 2022, all shares of Series B Preferred Stock eligible for mandatory conversion have been converted into common stock.
Series C Preferred Stock
On July 29, 2021, pursuant to Article III of our Articles of Incorporation, the Company designated a class of preferred stock, the “Series C Preferred Stock,” consisting of up to six hundred ( i 300) shares, par value $ i 0.001.
Under the Certificate of Designation, as amended, holders of Series C Preferred Stock are entitled to a liquidation preference on the stated value of $ i 1,200 per share. Holders of Series C Preferred Stock are entitled to a cumulative dividend of i 10% per annum. Series C Preferred Stock is convertible at the option of the Holder at a price equal to i 80% of the lowest VWAP of the Common Stock during the twenty ( i 20) Trading Days immediately preceding, but not including the Conversion Date. Series C Preferred Stock Holders will vote together with the common stock on an as-converted basis subject to the Beneficial Ownership Limitations.
/
| 19 |
| Table of Contents |
On July 28, 2021 the Company sold i 300 shares of Series C Preferred Stock for $ i 300,000 cash.
Issuances of Common and Preferred Stock for the nine months ended April 30, 2022:
On August 16, 2021 the Company issued 56,500 shares of common stock for services valued at $ i 7,140, which had been previously provided and recorded as stock payable.
On August 16, 2021 the Company issued i 60,000 shares of common stock for services valued at $ i 13,890.
On August 16, 2021 the Company issued i 500,000 shares of common stock for cash proceeds of $ i 25,000 received in a prior period.
On August 19, 2021 the Company issued i 300,000 shares of common stock for cash proceeds of $ i 22,500 received in a prior period.
On August 19, 2021 the Company issued i 500,000 shares of common stock for cash proceeds of $ i 25,000 received in a prior period.
On August 19, 2021 the Company issued i 500,000 shares of common stock for cash proceeds of $ i 25,000 received in a prior period.
On August 26, 2021 the Company issued i 800,000 shares of common stock for cash proceeds of $ i 40,000 received in a prior period.
On August 26, 2021 the Company issued i 533,334 shares of common stock for cash proceeds of $ i 40,000 received in a prior period.
On September 13, 2021 a shareholder elected to convert i 5,000 shares of Series A Preferred Stock into i 500,000 shares of the company’s Common Stock.
On September 13, 2021 the Company issued i 200,000 shares of common stock for cash proceeds of $ i 20,000 received in a prior period.
On September 13, 2021 the Company issued i 200,000 shares of common stock for cash proceeds of $ i 20,000 received in a prior period.
On June 24, 2021 the Company agreed to issue i 59,500 shares of common stock per month for 6 months of services, ending on December 24, 2021. Per this agreement the Company agreed to issue i 300,500 shares of common stock for services valued at $ i 29,071 during the nine months ended April 30, 2022. As of April 30, 2022 the shares had not been issued and are included in stock payable.
On November 5, 2021 the Company issued i 169,500 shares of common stock for services valued at $ i 20,425.
On November 15, 2021 the Company issued i 300,000 shares of common stock for services valued at $ i 375,000.
On November 18, 2021 the Company received and cancelled i 15,000 shares of common stock.
On December 17, 2021 the Company repurchased and cancelled i 1,400,000 shares of common stock for $ i 97,500.
On February 2, 2022 the Company agreed to issue i 4,000,000 shares of common stock for cash proceeds of $ i 160,000. As of April 30, 2022 the shares had not been issued and are included in stock payable.
On February 10, 2022 the Company agreed to issue i 60,000 shares of common stock for cash proceeds of $ i 3,000. As of April 30, 2022 the shares had not been issued and are included in stock payable.
On February 10, 2022 the Company agreed to issue i 60,000 shares of common stock for cash proceeds of $ i 3,000. As of April 30, 2022 the shares had not been issued and are included in stock payable.
On February 10, 2022 the Company agreed to issue i 150,000 shares of common stock for cash proceeds of $ i 6,000. As of April 30, 2022 the shares had not been issued and are included in stock payable.
i
13. SUBSEQUENT EVENTS
In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to April 30, 2022 to the date these financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements.
| 20 |
| Table of Contents |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended, that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our industry, our beliefs and our assumptions. Words such as “anticipate,” “expects,” “intends,” “plans,” “believes,” “seeks” and “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Form 10-K. Investors should carefully consider all of such risks before making an investment decision with respect to the Company’s stock. The following discussion and analysis should be read in conjunction with our consolidated financial statements and summary of selected financial data for THC Therapeutics, Inc. Such discussion represents only the best present assessment from our Management.
Overview
THC Therapeutics, Inc. (the “Company”), was incorporated in the State of Nevada on May 1, 2007, as Fairytale Ventures, Inc., and later changed its name to Aviation Surveillance Systems, Inc. and Harmonic Energy, Inc. On January 23, 2017, the Company changed its name to THC Therapeutics, Inc. THC Therapeutics, Inc., together with its subsidiaries, is collectively referred to herein as the “Company,” and “THC Therapeutics.”
The Company is focused on developing a sanitizing herb dryer, the dHydronator®, which has been specifically designed for the drying and sanitizing (i.e., reducing the bacterial count) of freshly harvested cannabis, and other herbs, flowers, and tea leaves.
Corporate History
THC Therapeutics, Inc., was incorporated in the State of Nevada on May 1, 2007, as Fairytale Ventures, Inc., and later changed its name to Aviation Surveillance Systems, Inc. and Harmonic Energy, Inc. On January 23, 2017, the Company changed its name to THC Therapeutics, Inc. On May 30, 2017, the Company formed Genesis Float Spa LLC, a wholly-owned subsidiary, to market its float spa assets purchased for wellness centers. On January 17, 2018, the Company changed its name to Millennium BlockChain Inc. On September 28, 2018, the Company changed its name back to THC Therapeutics, Inc.
The Company’s fiscal year end is July 31st, its telephone number is (702) 602-8422, and the address of its principal executive office is 11700 W Charleston Blvd. #73, Las Vegas, Nevada, 89135.
Description of Business
The Company is focused on operations in the wellness industry. The Company is developing a sanitizing herb dryer, the dHydronator®, with multiple design, function, and usage patents. This innovative, laboratory-proven product is specifically designed for the drying and sanitizing (i.e., reducing the bacterial count by using ultraviolet light) of freshly harvested cannabis, and other herbs, flowers, and tea leaves. The dHydronator® can reduce moisture content of cannabis to 10-15% in only 10-14 hours. Traditional herbal drying times can take up to two weeks. Additionally, after the Company has launched the dHydronator®, and depending on available funding, the Company intends to establish a float spa facility that will allow each guest to customize their wellness experience, at their own pace, based on their individual needs.
Wellness Operations
THC Therapeutics is focused on the wellness industry, with plans to develop a patented herb dryer as well as an innovative float spa facility in Las Vegas, Nevada, or southern California.
The Company is developing a sanitizing herb dryer, the dHydronator®, with multiple design, function, and usage patents. This innovative, laboratory-proven1 product is specifically designed for the drying and sanitizing (i.e., reducing the bacterial count by using ultraviolet light) of freshly harvested cannabis, and other herbs, flowers, and tea leaves. The dHydronator® can reduce moisture content of cannabis to 10-15% in only 10-14 hours. Traditional herbal drying times can take up to two weeks. The dHydronator® can also significantly reduce the bacterial count of the cannabis during the drying process, but it will not eliminate all bacteria from the cannabis or other plant materials.
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The Company has a functioning prototype of the dHydronator® similar in design to that shown below, which is now protected by a patent with the United States Patent and Trademark Office (see “Patent, Trademark, License & Franchise Restrictions and Contractual Obligations & Concessions” below), and once the Company has sufficient funds available, the Company plans to source parts for serial manufacturing and negotiate and secure serial manufacturing and assembly. The Company also plans to hire sales and marketing staff as funds are available.
1 Tests were conducted in 2016-2017 by independent cannabis-testing labs: first by CannLabs on the first-generation dHydronator® prototype, and later by Digipath Labs on the second-generation prototype. Optimal cannabis moisture content is 8-12%. The initial testing by CannLabs showed that (i) moisture content across five wet cannabis samples was reduced to an average moisture content of 13.81% with a standard deviation of 4.04% after 12 hours of drying, and 8.86% with a standard deviation of 2.25% after 16 hours of drying, and (ii) after autoclaving cannabis flowers to ensure sterility and then spiking multiple samples with 100 CFU of E. Coli and Salmonella bacteria and Aspergillus niger mold, testing for the presence of the bacteria and mold by both quantitative polymerase chain reaction (qPCR) and traditional plating methods, which testing concluded that the dHydronator® prototype eliminated or reduced the bacteria and mold contamination, but did not quantify the results. The subsequent testing by Digipath Labs on the second-generation prototype covered multiple strains and independent tests to confirm the prior findings. The strains tested were Lucy Diamond, Cotton Candy, Blue Dream, Kings Cut, Pot of Gold and Diablo. The optimal drying time was determined to be 10-14 hours in the first test. The Company’s proprietary sanitizing technology brought the failing TAC (total aerobic count) from over 300,000 CFU/g down to 78,000 CFU/g (anything less than 100,000 CFU/g is considered “passing”) in the second test. In the third test, after drying 14 hours and 15.5 hours in the dHydronator® and using the Company’s proprietary sanitizing technology for a longer period than required, the moisture content had been reduced from 80% (at 0 hours) to 10.89% (at 14 hours) and 8.83% (at 15.5 hours), the THCA% had been reduced from 21.2% (at 0 hours) to 17.26% (at 14 hours) and 18.26% (at 15.5 hours), and the TAC had been reduced from 210,000 CFU/g (at 0 hours) to 1,500 CFU/g (at 14 hours) and 500 CFU/g (at 15.5 hours). In the fourth experiment, after 12 hours and 15.5 hours of drying in the dHydronator® and using the proprietary sanitizing technology for a longer period than required, the moisture content had reduced from 80% to 12.00% (at 12 hours) and 7.44% (at 15.5 hours), the THCA% had been reduced from 21.2% to 20.08% (at 12 hours) and 19.43% (at 15.5 hours), and the TAC had been reduced from 190,000 CFU/g to 51,000 CFU/g (at 12 hours) and 2,300 CFU/g (at 15.5 hours). After 14 hours of drying, the moisture content had been reduced to 8.15%, the THCA% had been reduced to 19.82%, and the TAC had been reduced to 21,000 CFU/g. In the fifth test, prior moisture and THCA% results were tested, but this time using the Company’s proprietary sanitizing technology for a much shorter time period, using two samples of a different cannabis strain, and testing the expanded cannabinoid profile data of each sample, and after 12 hours of drying two different samples, moisture content for the two samples decreased from 74% and 74% to 9.17% and 9.90%, respectively, and THCA% increased from 14.45% and 14.94% before drying to 16.81% and 17.2%, respectively, after 12 hours of drying. Test six was a test of the same strain as test five but using a different lot of plant material, and moisture content decreased from 81% to 11.5% after 12 hours of drying, while TCHA% increased from 21.28% to 22.6% after 12 hours of drying. The seventh through ninth tests confirmed prior results.
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More specifically, once we have at least $2,000,000 in in available cash flow or funds from other operations and if we receive the patent, we intend to engage in further development efforts as follows: (i) finalizing case design, with an estimated tooling expense of approximately $300,000-$500,000; manufacturing pre-production units for field testing and presentation to potential partners and distributors, with an estimated expense of $250,000; (iii) hiring a subject-matter expert and consultants or employees in the home herb garden and legal cannabis marketplace to manage the development and sales of herb dryer, with an estimated expense of $400,000 for 12 months; (iv) engaging in further detailed laboratory of our herb drying with respect to cannabis plants and home herb garden plants, with an estimated expense of $50,000 to $100,000 for 12 months; (v) establishing a relationship with a market research and/or marketing company to explore creative strategies, advertising concepts, and consumer opinion, explore applications of our intellectual property in the existing wholesale and retail distribution channels for home herb, garden products and legal cannabis markets, and determine the best path for sales, distribution and licensing of our intellectual property, with an estimated expense of $1,000,000 for 12 months.
Additionally, on May 12, 2017, the Company entered into an asset purchase agreement with a third party under which it acquired four (4) float spa units and associated equipment. With the acquisition of these assets, the Company intends to establish a float spa facility that will allow each guest to customize their wellness experience, at their own pace, based on their individual needs. Once we have approximately $500,000-$1,000,000 in available cash flow or funds from other operations, and after the launch of our dHydronator® sanitizing herb dryer, we plan to capitalize on our spa assets purchased in 2017 by (i) leasing a 2,500 to 5,000 square foot facility in Nevada or California, to be built out as needed (and with the size of the facility dependent on available capital); (ii) obtaining necessary licenses and permits, (iii) purchasing inventory, equipment, furnishings and supplies, including inventory, fixtures, furnishings and equipment for an oxygen bar and a Kampuchea, juice and tea Bar, refrigeration and storage equipment, point of sale computers and tablets, digital monitors, signage and display materials, and other suppliers; (iv) hiring spa management personnel including a manager, assistant manager and two spa attendants; (v) hiring marketing and sales consultants, and (vi) launching a marketing campaign to include internet lead services, Groupon and social networking.
Competition
There are a number of commercial herb dryers sold by competitors, including Yofumo Technologies, which are already commercially available, and which have significant market share. As to our float spa plans, we believe True Rest Float Spa, which has over 20 spa locations across the country, is our primary national competitor, and there are numerous locally owned float spas throughout the country that would considered competitors with our spa operations. There is no assurance that we will be able to compete effectively with any of these competitors.
Market Opportunity
The Company’s herb dryer, the dHydronator®, safely lowers moisture content and sanitizes without harm to the integrity of the plant. Our test results have been proven to dry cannabis in less than 14 hours verses up to 14 days using traditional drying methods. Test results indicate the removal of many surface germs and bacteria including powder mold, dust mites and spider mites from herbs, plants, the surface of glass or ceramic herbal tea accessories, and any other object that fits safely in the drying chamber. Therefore, we believe that our product will be attractive to the cannabis and home herb and garden product markets.
With regard to floatation therapy, the sensory deprivation consumer typically ranges in age from eighteen to eighty. Floatation therapy is a service that is unisex in its appeal and attracts many. As many consumers seek natural alternative therapies for the relief from pain, stress and sleep disorders that affect a significant percentage of the population, we believe that our planned floatation therapy spa facilities will be attractive to these consumers.
Marketing Strategy
We plan to attend regional cannabis-related trade shows and offer field testing to legal cannabis growers and suppliers in the United States and Canada initially, and throughout the world once the technology has been adopted in the regional market. We also plan to establish a relationship with a market research and marketing company to explore creative strategies, advertising concepts, consumer opinion, existing distribution and sales channels and potential licensing of our intellectual property, to determine the best path for sales and distribution. We also intend to hire subject matter expert consultants or employees in the legal cannabis and home herb marketplace to manage the development and sales of our products. Once our marketing experts identify an herbal or commercial agriculture niche or venue to enter or solicit, we will market to distributors and retailers via trade shows and direct contact.
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With regard to our spa plans, we intend to launch internet, Groupon and social networking campaigns offering coupons and membership plans for floatation therapy, and our planned oxygen bar and Kampuchea, juice and tea bar. We plan to invite local TV and Radio personalities to tour our facilities, and we plan to offer local healthcare and rehabilitation service providers and non-competitive spa owners and managers a private tour of our spa facilities.
Customers
Due to the nature of its business and its focus on development of its patent-pending herb dryer, the Company does not currently have any customers.
Patent, Trademark, License & Franchise Restrictions and Contractual Obligations & Concessions
The Company has acquired the exclusive intellectual property rights to the dHydronator® sanitizing plant dryer with improved convection flow from the Company’s CEO and Director, Brandon Romanek. Mr. Romanek’s father irrevocably assigned those intellectual property rights to Mr. Romanek in 2016. A trademark application for the mark “dHyrdonator” has been filed (serial no. 86874611), and a patent application was filed with the United States Patent and Trademark Office (“USPTO”), docket number 5503.101 (application nos. 15/467,722 and 62/312,327), for 20 separate herb dryer design, function, and usage patents. On or about July 20, 2018, the Company’s patent counsel received a Notification of Allowance from the USPTO, notifying the Company that the USPTO would be allowing all 20 claims, and on or about November 20, 2018, the USPTO granted the final patent (patent no. 10,132,56), the Company was subsequently notified of the patent grant, and the patent has been recorded with the USPTO as being assigned to the Company.
Governmental Regulations
We will be governed by government laws and regulations governing spas. We do not believe the dHydronator® will be subject to regulation by the U.S. Food and Drug Administration or any other government agency (other than pursuant to general laws governing truth in advertising or similar laws under the purview of the Federal Trade Commission). We believe that we are currently in compliance with all laws which govern our operations and have no current liabilities thereunder. Our intent is to maintain strict compliance with all relevant laws, rules and regulations.
Employees
As of April 30, 2022, the Company had one employee.
Reports to Security Holders
The Company intends to furnish its stockholders with annual reports containing consolidated financial statements audited by its independent registered public accounting firm and to make available quarterly reports containing unaudited consolidated financial statements for each of the first three quarters of each year. The Company files Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports on Form 8-K with the Securities and Exchange Commission in order to meet its timely and continuous disclosure requirements. The Company may also file additional documents with the Commission if those documents become necessary in the course of its operations.
The public may read and copy any materials that the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The site address is www.sec.gov.
Available Information
All reports of the Company filed with the SEC are available free of charge through the SEC’s website at www.sec.gov. In addition, the public may read and copy materials filed by the Company at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. The public may also obtain additional information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.
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Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and notes thereto for the three months ended April 30, 2022, and related management discussion herein.
Our financial statements are stated in U.S. Dollars and are prepared in accordance with generally accepted accounting principles of the United States (“GAAP”).
Going Concern Qualification
Several conditions and events cast substantial doubt about the Company’s ability to continue as a going concern. The Company has incurred cumulative net losses of approximately $38,389,155 since its inception and requires capital for its contemplated operational and marketing activities to take place. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern.
For the Three Months Ended April 30, 2022 and 2021:
Our operating results for the three months ended April 30, 2022 and 2021, and the changes between those periods for the respective items are summarized as follows:
|
| Three months ended April 30, |
|
| Change |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| Amount |
|
| Percentage |
| ||||
Operating loss |
| $ | (123,529 | ) |
| $ | (169,508 | ) |
| $ | (45,979 | ) |
| (27 | %) | |
Other expense |
| $ | (508,749 | ) |
| $ | (181,272 | ) |
| $ | 327,477 |
|
|
| 181 | % |
Net loss |
| $ | (632,278 | ) |
| $ | (350,780 | ) |
| $ | 281,498 |
|
|
| 80 | % |
Revenues
We did not earn any revenues during the three months ending April 30, 2022 and 2021, respectively. We do not anticipate earning significant revenues until such time that we have fully developed our business strategy and launched sales of our dHydronator® product.
Operating Income (Loss)
Our loss from operations decreased to $123,529 during the three months ending April 30, 2022, from an operating loss of $169,508 in the comparative period ending April 30, 2021. The following table presents operating expenses for the three-month periods ending April 30, 2022 and 2021:
|
| Three months ended |
|
|
|
|
| |||||||||
|
| April 30, |
|
| Change |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| Amount |
|
| Percentage |
| ||||
Professional fees |
| $ | 43,148 |
|
| $ | 23,385 |
|
| $ | 19,763 |
|
|
| 85 | % |
Consulting fees |
|
| - |
|
|
| 17,978 |
|
|
| (17,978 | ) |
| (100 | )% | |
Salaries and wages |
|
| 46,937 |
|
|
| 46,937 |
|
| (- | ) |
| (0 | )% | ||
General and administrative expenses |
|
| 33,444 |
|
|
| 81,208 |
|
|
| (47,764 | ) |
| (59 | )% | |
Total operating expenses |
| $ | 123,529 |
|
| $ | 169,508 |
|
| $ | (45,979 | ) |
|
| (27 | )% |
We realized a increase of $19,763 in professional fees during the three months ended April 30, 2022, as compared to the three months ended April 30, 2021, primarily due to a increase in stock-based compensation. We realized a decrease of $17,978 in consulting fees during the three months ended April 30, 2022, as compared to the same period in the prior fiscal year, primarily due to an decrease in consulting services. We realized an decrease of $47,764 in general and administrative expenses during the three months ended April 30, 2022, as compared to the same period in the prior fiscal year, primarily due to an decrease in travel costs.
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Other Income (Expense)
The following table presents other income and expenses for the three months ended April 30, 2022 and 2021:
|
| Three months ended |
|
|
|
|
|
|
| |||||||
|
| April 30, |
|
| Change |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| Amount |
|
| Percentage |
| ||||
Loss on change in derivative liability |
| $ | (467,005 | ) |
| $ | (85,873 | ) |
| $ | (381,132 | ) |
| (444 | )% | |
Interest Expense |
|
| (41,744 | ) |
|
| (95,399 | ) |
|
| (53,655 | ) |
| (56 | )% | |
Total other income (expense) |
| $ | (508,749 | ) |
| $ | (181,272 | ) |
| $ | (327,477 | ) |
|
| 181 | % |
Loss on change in derivative liability increased by $381,132 during the three months ended April 30, 2022, as compared to the same period in the prior fiscal year, due to change in derivative liabilities caused by fluctuations in the price of our common stock between reporting periods. Interest expense decreased by 35,696 during the three months ended April 30, 2022, as compared to the same period in the prior fiscal year, due to a conversion of principal amounts of convertible notes to common stock.
Net loss
Net loss increased to $632,278 during the three months ended April 30, 2022, from a net loss of $350,780 in the same period in the prior fiscal year due to the factors discussed above.
Results of Operations for the nine months ended April 30, 2022, compared with the nine months ended April 30, 2021
Our operating results for the nine months ended April 30, 2022 and 2021, and the changes between those periods for the respective items are summarized as follows:
|
| Nine Months Ended |
|
|
| |||||||||||
|
| April 30, |
|
| Change |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| Amount |
|
| Percentage |
| ||||
Operating loss |
| $ | (1,213,159 | ) |
| $ | (611,464 | ) |
| $ | (601,695 | ) |
|
| 98 | % |
Other expenses |
| $ | (658,016 | ) |
| $ | (189,191 | ) |
| $ | (468,825 | ) |
|
| 248 | % |
Net loss |
| $ | (1,871,175 | ) |
| $ | (800,655 | ) |
| $ | (1,070,520 | ) |
|
| 134 | % |
Revenue
We did not earn any revenues during the nine months ended April 30, 2022 and 2021, respectively. We do not anticipate earning significant revenues until such time that we have fully developed our business strategy and launched sales of our dHydronator® product.
Operating Loss
Our loss from operations increased to $1,213,159 during the nine months ended April 30, 2022, compared to an operating loss of $611,464 in the comparative period in the prior fiscal year. The following table presents operating expenses for the nine-month periods ended April 30, 2022 and 2021:
|
| Nine months Ended |
|
|
| |||||||||||
|
| April 30, |
|
| Change |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| Amount |
|
| Percentage |
| ||||
Professional fees |
| $ | 161,459 |
|
| $ | 132,906 |
|
| $ | 28,553 |
|
|
| 21 | % |
Consulting fees |
|
| 487,715 |
|
|
| 161,530 |
|
|
| 326,185 |
|
|
| 202 | % |
Salaries and wages |
|
| 415,380 |
|
|
| 149,038 |
|
|
| 266,342 |
|
|
| 179 | % |
General and administrative |
|
| 148,605 |
|
|
| 167,990 |
|
|
| (19,385 | ) |
| (12 | )% | |
Total operating expenses |
| $ | 1,213,159 |
|
| $ | 611,464 |
|
| $ | 601,695 |
|
|
| 98 | % |
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| Table of Contents |
We realized a increase of $28,553 in professional fees during the nine months ended April 30, 2022, as compared to the nine months ended April 30, 2021, primarily due to a increase in stock-based compensation. We realized a increase of $326,185 in consulting fees during the nine months ended April 30, 2022, as compared to the same period in the prior fiscal year, primarily due to a increase in consulting services. We realized a decrease of $19,385 in general and administrative expenses during the nine months ended April 30, 2022, as compared to the same period the prior fiscal year, primarily due to a decrease in travel costs.
Other Income (Expense)
The following table presents other income and expenses for the nine months ended April 30, 2022 and 2021:
|
| Nine months ended |
|
|
|
|
|
|
| |||||||
|
| April 30, |
|
| Change |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| Amount |
|
| Percentage |
| ||||
Gain/(loss) on change in derivative liability |
| $ | (545,556 | ) |
| $ | 110,013 |
| $ | (655,569 | ) |
| (596 | )% | ||
Interest Expense |
|
| (112,460 | ) |
|
| (299,204 | ) |
|
| 186,744 |
|
| (62 | )%) | |
Total other income (expense) |
| $ | (658,016 | ) |
| $ | (189,191 | ) |
| $ | (468,825 | ) |
|
| 248 | % |
Loss on change in derivative liability decreased by $655,569 during the nine months ended April 30, 2022, as compared to the same period in 2021, due to the change in derivative liabilities caused by fluctuations in the price of our common stock between reporting periods. Interest expense decreased by $186,744 during the nine months ended April 30, 2022, as compared to the same period in 2021, due to a conversion of principal amounts of convertible notes to common stock.
Net Income loss
Net loss decreased to $1,871,175 during the nine months ended April 30, 2022, from a net loss of $800,655 in the same period 2021.
Liquidity and Capital Resources
Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations through sales of our herb dryer and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.
Working Capital
The following table presents our working capital position as of April 30, 2022, and July 31, 2021:
|
| April 30, |
|
|
| |||
|
| 2022 |
|
| 2021 |
| ||
Cash and cash equivalents |
| $ | 3,817 |
|
| $ | 296,130 |
|
Prepaid expenses |
|
| 43,484 |
|
|
| 4,586 |
|
Inventory |
|
| 830 |
|
|
| 830 |
|
Current assets |
| $ | 48,131 |
|
| $ | 301,546 |
|
Current liabilities |
|
| 3,974,153 |
|
|
| 2,857,394 |
|
Working capital |
| $ | (3,926,022 | ) |
| $ | (2,555,848 | ) |
The change in working capital during the nine months ended April 30, 2022, was primarily due to an increase an increase in current liabilities due to an increase in borrowing from related party parties as well as an increase in accounts payable.
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Cash Flow
We fund our operations with cash received from advances from officer’s and related parties, debt, and issuances of equity.
The following tables presents our cash flow for the nine months ended April 30, 2022 and 2021:
|
| Nine months ended |
| |||||
|
|
| ||||||
|
| 2022 |
|
| 2021 |
| ||
Cash Flows Used in Operating Activities |
| $ | (395,364 | ) |
| $ | (352,334 | ) |
Cash Flows Used in Investing Activities |
|
| - |
|
|
| (152,785 | ) |
Cash Flows Provided by Financing Activities |
|
| 103,051 |
|
|
| 502,775 |
|
Net increase (decrease) in Cash During Period |
| $ | (292,313 | ) |
| $ | (2,344 | ) |
Cash Flows from Operating Activities
We did not generate positive cash flows from operating activities for the three months ended April 30, 2022.
For the nine months ended April 30, 2022, net cash flows used in operating activities consisted of a net loss of $1,871,175, reduced by depreciation of $11,453, amortization of debt discounts of $14,682, and stock-based compensation of $440,048, offset by a loss on change in derivative liabilities of $545,556, and increased by a net increase in change of operating assets and liabilities of $464,072. For the nine months ended April 30, 2021, net cash flows used in operating activities consisted of a net loss of $800,655, reduced by depreciation of $12,244, amortization of debt discounts of $243,404, stock-based compensation of $108,552, and a gain on change in derivative liabilities of $110,013, and increased by a net increase in change of operating assets and liabilities of $194,134.
Cash Flows from Investing Activities
No investment activities occurred during 2022. For the three months ended April 30, 2021, net cashflows used in investing activities consisted of purchases of other assets of $152,785.
Cash Flows from Financing Activities
For the nine months ended April 30, 2022, we received $103,051, consisting of related party advances, convertible notes, and proceeds from the sale of common stock. For the nine months ended April 30, 2021, we received $502,775, consisting of related party advances and proceeds from the sale of common stock, offset against repayments of convertible notes.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
ITEM 4. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean the company’s controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a simple system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported with the time periods specified. Our chief executive officer and chief financial officer also concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 of the Exchange Act that occurred during the quarter ended April 30, 2022, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us, other than as set forth herein.
On or about December 18, 2020, Power Up Lending Group, Ltd. (“Power Up”) filed suit against the Company, the Company’s executive officers, and the Company’s transfer agent (Case Index No. 614700/2020, Supreme Court of the State of New York for Nassau County, Power Up Lending Group, Ltd. v. THC Therapeutics, Inc., Parker Mitchell, Transhare Corporation, and Brandon Romanek), alleging that the Company’s convertible promissory notes issued to Power Up are in default as a result of the Company’s alleged failure to honor the conversion terms of the notes along with related claims, and seeking monetary damages in excess of $280,920 (representing 200% of the outstanding note balances) and equitable relief to force the Company to honor Power Up’s conversion of note amounts into Company common stock. The Company and its officers answered the complaint and filed counterclaims against Power Up. The parties settled in July of 2021, and the case was subsequently dismissed by Power Up.
On or about January 5, 2021, another Company lender, Iliad Research and Trading, L.P. (“Iliad”), sent a demand letter to the Company regarding the Company’s alleged default under its promissory note issued to Iliad. The Company retained litigation counsel in Nevada and responded, and Iliad sued the Company in the fall of 2021 in Utah, where Iliad is domiciled (case no. 210000342 filed in the Third Judicial Court of Salt Lake City, Utah). In December of 2021, the Company was improperly served, Iliad subsequently received a default judgment, and the Company then filed a motion to set aside the judgment, which motion was granted by the court on or about May 9, 2022. The Company intends to vigorously defend the action, and on or about May 31, 2022, removed the case to United States District Court for the District of Utah (case no. 2:22-cv-00367-DAO). The Company subsequently filed a motion to stay arbitration as demanded by Iliad, and filed an Answer and Counterclaim against Iliad.
In the spring of 2021, the Company’s former CEO, Parker Mitchell, filed suit against the Company for wrongful termination (case no. A-21-833007-Z filed in the District Court for Clark County, Nevada). The matter was subsequently settled on or about December 12, 2021, and the case was then dismissed.
In the fall of 2021, the Company’s former CFO, an individual representing himself as Jonathan Cross, but who, upon information and belief was the convicted felon, John Dankovich, made numerous demands of the Company in connection with his termination by the Company. The Company responded to Mr. Dankovich on or about November 11, 2021, and Mr. Dankovich has taken no further action against the Company to its knowledge.
In the fall of 2021, one of the Company’s former directors and current Company business consultant, Joshua Halford, made a demand for payment of funds due to Mr. Halford under a consulting agreement, Mr. Halford and the Company have since resolved the matter, and Mr. Halford is still providing consulting and technical design services to the Company in connection with the Company’s dHyrdonator herb dryer product redesign.
Not applicable.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
There were no unregistered sales or issuances of equity securities during the three months ended April 30, 2022.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
None.
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101.INS** |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
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101.SCH** |
| Inline XBRL Taxonomy Extension Schema Document | |
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101.CAL** |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
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101.DEF** |
| Inline XBRL Taxonomy Extension Definition Linkbase Document | |
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101.LAB** |
| Inline XBRL Taxonomy Extension Label Linkbase Document | |
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101.PRE** |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
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104** |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |
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** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| THC THERAPEUTICS, INC. |
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Date: June 15, 2022 | By: | /s/ Brandon Romanek |
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| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 3/30/23 | ||||
| 7/31/22 | ||||
| Filed on: | 6/16/22 | |||
| 6/15/22 | ||||
| 6/13/22 | ||||
| 5/31/22 | ||||
| 5/9/22 | ||||
| For Period end: | 4/30/22 | |||
| 3/30/22 | 10-K | |||
| 2/10/22 | ||||
| 2/2/22 | ||||
| 1/31/22 | 10-Q | |||
| 12/24/21 | ||||
| 12/17/21 | ||||
| 12/12/21 | ||||
| 11/18/21 | ||||
| 11/15/21 | ||||
| 11/11/21 | ||||
| 11/5/21 | ||||
| 10/31/21 | 10-Q | |||
| 10/29/21 | NT 10-K | |||
| 9/13/21 | ||||
| 8/26/21 | ||||
| 8/19/21 | ||||
| 8/16/21 | ||||
| 8/15/21 | ||||
| 7/31/21 | 10-K, NT 10-K | |||
| 7/29/21 | 8-K | |||
| 7/28/21 | ||||
| 6/24/21 | ||||
| 5/1/21 | ||||
| 4/30/21 | 10-Q, NT 10-Q | |||
| 3/26/21 | 10-Q | |||
| 1/31/21 | 10-Q, NT 10-Q | |||
| 1/5/21 | ||||
| 12/18/20 | ||||
| 12/12/20 | ||||
| 12/1/20 | ||||
| 11/14/20 | ||||
| 10/31/20 | 10-Q, NT 10-Q | |||
| 9/30/20 | ||||
| 9/2/20 | ||||
| 6/20/20 | ||||
| 5/28/20 | ||||
| 5/26/20 | ||||
| 5/7/20 | ||||
| 5/1/20 | ||||
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| 4/23/20 | ||||
| 4/13/20 | ||||
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| 3/27/20 | ||||
| 3/26/20 | ||||
| 3/24/20 | ||||
| 2/20/20 | ||||
| 2/10/20 | ||||
| 1/27/20 | ||||
| 7/31/19 | 10-K, 10-K/A, NT 10-K | |||
| 6/20/19 | ||||
| 6/19/19 | ||||
| 5/1/19 | ||||
| 4/19/19 | ||||
| 4/4/19 | ||||
| 1/31/19 | 10-Q | |||
| 11/20/18 | ||||
| 9/28/18 | ||||
| 7/20/18 | ||||
| 1/17/18 | ||||
| 6/5/17 | ||||
| 5/30/17 | ||||
| 5/12/17 | ||||
| 1/24/17 | ||||
| 1/23/17 | ||||
| 5/1/07 | ||||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 10/04/19 THC Therapeutics, Inc. 10-12G/A 8:1.1M Discount Edgar/FA 8/22/19 THC Therapeutics, Inc. 10-12G/A 7:1.2M Discount Edgar/FA 7/08/19 THC Therapeutics, Inc. 10-12G/A 3:983K Discount Edgar/FA 4/08/19 THC Therapeutics, Inc. 10-12G/A 4:38M Discount Edgar/FA 10/19/18 THC Therapeutics, Inc. 10-12G 10/22/18 17:17M Discount Edgar/FA |